Housing program funding uncertain

Initiative for neglected neighborhoods could be imperiled by U.S. spending cuts

August 29, 2005|By John Fritze | John Fritze,SUN STAFF

A low-income housing program crafted by city officials to win support for a new convention center hotel relies heavily on federal grants that are in jeopardy of being reduced, leading some housing experts to question the program's long-term viability.

The Baltimore Affordable Housing Program, unveiled last month to appease City Council members who felt the city has neglected neighborhood blight, differs from many successful low-income housing programs across the nation in that it is not tied to a dedicated source of funding, such as a new tax.

Instead, the $59 million proposal draws nearly half its funding from Community Development Block Grants, a federal program the Bush administration has targeted for reduction. Mayor Martin O'Malley acknowledges he isn't sure the money will necessarily be there in the future - but he insists he views the fund as a long-term initiative.

"Any dollars that come to cities are first on President Bush's list of things to cut," O'Malley said. "But this is a big step in the right direction and there will probably be ways to tweak and improve upon on it."

In addition to the federal grants, the program relies on $10 million in borrowing and $10.8 million in profits the city receives from the Inner Harbor Hyatt in exchange for helping build that hotel nearly 20 years ago. In its first year, the city will earmark $10 million in surplus cash for the fund.

Overall, $59 million would be spent over five years.

While many experts applaud the city for devoting attention to the issue, they said programs tend to accomplish more when supported by long-term, constant sources of money. Long-term funding is key, those experts said, because it can take decades to change housing trends.

"If you have a dedicated revenue source, you wipe away your largest problem, which is the whim of whoever's in office," said Linda Couch, deputy director of the Washington-based National Low Income Housing Coalition. "The chance that you're going to solve the problem in one or two years is quite slim."

Boston, for instance, collects a $7.18 fee from commercial developers for every square foot they build over 100,000 square feet. Since the fund was established in 1986, more than $80 million has been raised and 6,221 new low-income housing units have been created, said Sheila Dillon, deputy director of Boston's Department of Neighborhood Development.

Florida raised a tax on real-estate transactions in 1992 and funnels that money into local and state trust accounts that can be used for down-payment assistance and subsidized loans to developers.

A 2002 study by the Center for Community Change found that 42 cities had low-income housing funds with dedicated revenue.

Michael Sarbanes, executive director of Baltimore's Citizens Planning and Housing Association, said that long-term, dedicated funding is an ideal scenario that is not always attainable.

"While we're glad to see the City Council focusing on the need for neighborhoods and for affordable housing, what we're looking for is real action," he said. "There are important questions about exactly how much this is going to do for neighborhoods."

The housing program must be approved by the City Council and the Board of Estimates.

Baltimore officials said the program would pay to acquire and demolish dilapidated buildings. The cleared parcels could then be transferred to private developers to build new, low-income housing.

Paul T. Graziano, the city's housing commissioner, will decide which areas receive attention, according to the proposed ordinance.

"We would do it with the process that we already have in place," Graziano said. "We do this routinely now."

Graziano already oversees Project 5000, in which vacant or abandoned properties are acquired and then offered for redevelopment.

The proposed housing program was announced last month as the council debated a plan to build a $305 million convention center hotel. Several council members originally said they couldn't support a major downtown development project unless some money was set aside for neighborhoods.

The hotel project has received preliminary council approval by a 9-to-6 vote, and a final vote is expected next month.

"Yes, it should have been done 30 years ago," said Bishop Douglas I. Miles, with Baltimoreans United in Leadership Development, a group that lobbied heavily for the new program. "But people didn't have enough vision. The belief was that downtown redevelopment on its own would be enough to revitalize Baltimore."

Created in 1974, the Community Development Block Grant program is administered by the U.S. Department of Housing and Urban Development and is intended to improve housing and expand economic development in low- to moderate-income neighborhoods. The Bush administration has criticized the program for not adequately targeting high-need communities and has threatened to reduce the program.

Couch, with the Washington housing coalition, said block grant cuts, if they are made, likely would be phased in slowly.

O'Malley said he believes the city's growing budget surplus could eventually pay for the low-income housing initiative, even if other cash falls through.

"As our city and our elected leaders find more confidence in Baltimore's comeback ... I think you may well see that affordable housing fund more clearly established," the mayor said. "I'd look at it as a lasting thing."